Senator Chuck Schumer (D, NY) and Patrick Leahey (D, Vermont) seem to be gaining ground in their efforts to pass an amendment to remove insurance companies from the protection of antitrust laws. The ongoing health care overhaul currently being debated has brought to the fore the privilege the insurance industry has enjoyed for the past 64 years: Insurance companies, like Major League Baseball, have been exempt from federal antitrust laws.
Monopolies stagnate markets by preventing others from engaging in healthy market competition. Is the exemption a dying dinosaur?
Brief history of antitrust laws
Given the fears of monopolies in the late 1800s and to preserve America's free market economy, Congress passed the Sherman Antitrust Act in 1890; its aim being to combat anticompetitive practices, reduce market domination by individual corporations, and preserve unfettered competition as the rule of trade.
Soon the courts found certain activities to fall outside the scope of the Sherman Antitrust Act. To plug this loophole Congress passed the Clayton Antitrust Act of 1914. The Clayton Act added the following practices to the list of impermissible activities: price discrimination between different purchasers, if such discrimination tends to create a monopoly; exclusive dealing agreements; tying arrangements; and mergers and acquisitions that substantially reduce market competition.
The Robinson-Patman Act of 1936 amended the Clayton Act. The amendment aimed to outlaw certain abuses in manufacturers' practices.
Brief history of the insurance exemption
Before the 1940s, insurance regulation fell under sole province of the states. A Supreme Court case by the name of United States v. South-Eastern Underwriters challenged that in part on grounds of antitrust. The Supreme Court rules that the federal government could regulate insurance companies under the authority of the Commerce Clause in the U.S. Constitution. The McCarran-Ferguson Act of 1944 provides that federal anti-trust laws will not apply to the "business of insurance" as long as the state regulates in that area, but federal anti-trust laws will apply in cases of boycott, coercion, and intimidation.
The intention of the McCarran-Ferguson Act was to return the legal climate to that which existed prior to South-Eastern Underwriters by specifying that the states retained the authority to continue to regulate and tax the business of insurance. According to Senator Patrick Leahey, Judiciary Committee Chairman, the antitrust exemption in the 1944 McCarran-Ferguson Act was meant to be temporary. Senator Trent Lott and others have argued that the exemption has led to collusion by insurance companies on setting rates and denying claims, as witnessed by the experience of hurricane Katrina. McCarran-Ferguson, in other words, is obsolete, and potentially damaging.
Department of Justice position
Christine A. Varney, Assistant Attorney General (Antitrust Division), testified before the Committee on the Judiciary United States Senate hearing on "Prohibiting Price Fixing and Other Anticompetitive Conduct in the Health Insurance Industry." The following points can be gleaned from her testimony:
Ms. Varney argues: Health insurance reform should be built on a strong commitment to competition in all health-care markets, including those for health and medical malpractice insurance. Repealing the McCarran-Ferguson Act would allow competition to have a greater role in reforming health and medical malpractice insurance markets than would otherwise be the case.
The House health-care reform bills contemplates quasi-national exchanges, the Senate Finance bill contemplates national health insurance plans, and all the bills contemplate interstate compacts that would allow insurers to sell a single product across an array of states. These moves are all likely to increase competition and make it less likely that antitrust enforcement is necessary, but they also make the presence of the exemption more dangerous."
Conclusion
When the top lawyer of the Justice Department identifies the exemption as "dangerous," to the functioning of quasi-national exchanges [this is the public option, really], the time might just be ripe for Congress to remove the exemption. On the other hand, by spending countless millions of dollars lobbying Congress, the insurance industry might still have the upper hand in influencing the health-care reform. Why should they lose this monopoly? In some states, one or two insurance companies control all the insurance business. Is this a 'free market economy?"
M. Guerrero
Retired Investment Banker, Corporate Controller, graduate of Columbia University, and Vietnam Vet (1967-1968).
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Filed under Health Insurance by on Jun 6th, 2010. Comment. 
Asset protection? Do I need it for rental property? Is there such a thing as an asset protection specialist?
For asset protection, should I put my rentals in different names or should I set-up some type of trust?
I read on Yahoo! Answers that it is a good idea to set-up different corporations in order to purchase and own rental property. It was suggested as a way to protect your assets. I have two SF rental homes, both in my name. What kind of corporation should I set-up to protect myself?
And want about my personal residence? Should I put that in a corportion?
What is the best state to file incoropration papers? How much will it cost? I live in Washington State, but my rental property is in California.
What about a trust? Would a trust be better? What kind of trust is the best?
Is there some type of insurance policy I can buy?
The concept of asset protection is completely new to me.
Thank you in advance for your help.
Most respectfully,
A Real Beginner
As a general rule you wouldn't want to put properties into a corporation or even and LLC. If you are going to be operating income properties get a good CPA to help advise. He should be familiar with the laws of the state in which the property is located.
You should have a standard property and casualty policy on your rentals. Often you can extend the policy on your home to include rentals (save $).
I have been doing this for years. I can explain by email....
Filed under Home Insurance by on Jun 5th, 2010. Comment.
There are several websites available if you are looking to purchase individual or family health insurance online. Most of the large health insurance providers, i.e. Anthem, Assurant, Aetna, United Health Care, offer links for agencies to post on their websites. These links will describe plan offerings in great detail and will also allow buyers to make application using their online software.
Newer technologies provide a single "quoting engine" where consumers can compare several plans side by side from competing carriers. Not all plans will be available through this technology. It will depend on the state in which the consumer resides, the carriers and plan options the individual agency makes available, and to what extent a carrier conforms to such technology. Multiple carrier technologies will often require shoppers to provide personal contact information.
You will be Contacted by Several Agents
What really matters is to what extent consumers want to be contacted. Several sites will purport to offer quotes and only function to gather personal information. Even if health insurance quotes do appear, the site has captured the needed contact information. In fact, many sites are only businesses that collect personal information and sell it to multiple agents for profit. If consumers stumble upon non-agency mass marketing businesses such as these, they can expect to receive several calls and e-mails. This can be very frustrating for someone who is looking only to compare plans while possibly speaking with one or two agents.
Many Websites Only Want Your Personal Information
The reality is that a few "technology" companies have produced several optimized websites designed specifically to collect personal information. The sites are not owned by insurance agents or agencies. Selling leads to agents can be very profitable for these groups. Most agents do not have the resources or know how to compete with such technology. Thus, agents purchase the leads and work hard to win your business.
The consumer usually looses in this type of situation. Most consumers will become very annoyed when their phone is ringing off the hook and their email is full of unwanted messages. Those in need of health insurance might grow so aggravated, that they could choose not to purchase a health coverage right away. Thus, they may not get the insurance they need.
A Solution for Consumers
The principals of Hyers and Associates have tried to ease the process for those in need health insurance quotes in Georgia, Illinois, Indiana, Missouri, and Ohio. They have provided online links where consumers can anonymously search quotes with many of the major health insurance carriers - including Aetna, Anthem, Assurant, United Health Care or Golden Rule. Shoppers can view several plans, quotes, coverage options and brochures without disclosing their personal information. Once they are ready, buyers can then speak to an agent and learn more about their plan preferences and enrollment procedures.
A.M. Hyers has been working in the insurance and investment industry for over ten years. He owns and operates Hyers and Associates, Inc. an independent insurance agency doing business in Georgia, Illinois, Indiana, Missouri, and Ohio.
His agency offers insurance products in the individual, family, and small business group marketplace. They use the leading national insurance carriers to quote health insurance, health savings accounts, dental, and vision plans.
Other lines of insurance offered include life insurance, disability insurance, and long term care insurance. They use several carriers to quote Medicare supplement plans and Medicare Part D coverage for seniors. Additionally, the independent agents of Hyers and Associates Inc. offer fixed, indexed, and immediate annuity policies for individual and group retirement plans.
Individual, Family and Group Health Insurance Quotes in Georgia, Illinois, Indiana, Missouri, and Ohio
Filed under Health Insurance by on Jun 5th, 2010. Comment.